These are stories Report on Business is following Wednesday, May 23, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Raitt should keep her nose out of it It didn't take long for Canada's labour minister to start threatening to end the hours-old strike against Canadian Pacific Railway Ltd.
This isn't new for Lisa Raitt, of course. She always seems more than happy to stick her nose in where it doesn't belong. Take Air Canada, for example.
As The Globe and Mail's Brent Jang, Oliver Moore and Greg Keenan report, more than 4,800 Teamsters members walked off their jobs today in a contract dispute with the railway.
It's true that the strike is being felt by industry across the country amid the halt to freight traffic, and companies are scrambling to put alternate plans into action. It's also true that this is a bad time for companies to be hit.
But what's also true is that the best result will come from the collective bargaining process. For the government to take that away is to remove any attempt at a competitive and fair labour agreement, on both sides of the bargaining table.
Canada has a good collective bargaining regime, one that does not envisage government interference.
But Ms. Raitt, bound and determined to keep the trains running and the planes flying, is changing it on the fly.
"This morning I have already put on notice a bill to ensure that we are in the position to be able to introduce legislation," Ms. Raitt warned. "We want to make sure the effect on the economy is being brought to people’s attention and that we’re keeping it in mind as it proceeds."
Well, what did you expect? I'm somewhat surprised that investors are somewhat surprised that today's EU summit appears destined to fail.
Hopes had been building for something substantial at the informal dinner of European Union leaders in Brussels, but those hopes have largely been dashed amid continued opposition by Germany to the idea of a euro bond. Added to that are comments by the former prime minister of Greece, who warned in an interview with The Wall Street Journal of the threat of Athens quitting the euro zone.
"Today is the anniversary of the Defenestration of Prague in 1618, the start of the Thirty Years' War," said Chris Beauchamp, a market analyst at IG Index.
"Frankly, it seems as if this crisis has been going on for 30 years. Hopes for today's EU summit have been well and truly chucked out of the window, as the Germans once again state their firm opposition to euro zone bonds as a means of solving the crisis. Berlin has ignored the pleas of the OECD, IMF and its allies in Paris and Rome, believing that such a solution would only worsen the spendthrift ways of their southern neighbours."
As our European correspondent Eric Reguly writes in today's Report on Business, a euro zone bond would be supported by the credit ratings of all the members of the 17-nation monetary union, but really by Germany's triple-A standing.
Chancellor Angela Merkel doesn't want it. Not only would such a move boost borrowing costs, from her point of view it would also kill the incentive for fiscal discipline among the laggards of the group.
That sets the stage for a summit with no clear outcome, and continued turbulence in markets as the two-year-old debt crisis rages anew.
France's new president, François Hollande, is pushing the creation of a bond, and, given he also wants to focus more on economic growth and less on austerity, appears headed for a showdown with Ms. Merkel at some point.
"New French President François Hollande’s new growth mandate has seen him look to take the austerity fight to Germany, and while German Chancellor Angela Merkel may have been isolated at the G8, she remains much less so in Europe," warned senior analyst Michael Hewson of CMC Markets.
- Video: Pointless EU summit as Merkel says nein
- Eric Reguly's Economy Lab: Global market rally snuffed out on Europe fears
- Martin Wolf: A fragile Europe must change fast
BMO profit climbs Bank of Montreal kicked off the second-quarter reporting season among Canada's major banks today, with a 27-per-cent jump in profit.
BMO profit climbed to $1.03-billion, or $1.51 a share, diluted, The Globe and Mail's Grant Robertson reports. Its provisions for bad loans delinced by $102-million to $195-million.
Chief executive officer Bill Downe cited gains in Canada, the United States and its BMO Nesbitt Burns arm.
"The integration of our U.S. banking platform is on track," he said. "The business has been materially strengthened with expanded access to existing and new regions, increased brand awareness and a better ability to compete in highly attractive markets. The commercial team continues to outperform, and there’s visible, strong growth in our commercial and industrial book."
No school, no job Almost a million young Canadians were neither in school nor holding down a job last year, a proportion that has inched higher since the recession but remains lower than in most other G7 nations, The Globe and Mail's Tavia Grant writes today.
New analysis by Statistics Canada - the first of its kind in the country - finds 13 per cent, or 904,000, of the 6.8 million Canadians between the ages of 15 and 29 weren't in school nor at work last year.
The portion is the second-lowest in the G7.
Retail sales rise Are higher pump prices diverting consumer spending in Canada?
Overall retail sales rose 0.4 per cent in March, Statistics Canada said today, boosted by a 1.2-per-cent gain in the auto sector.
When autos are stripped out, though, sales rose by just 0.1 per cent, which was weaker than economists had expected.
"Even with March's advance, real retail sales rose just 0.2 per cent annualized in the first quarter of 2012, the weakest since Q1 of 2011," said senior economist Krishen Rangasamy of National Bank.
"That suggests limited contribution to GDP by consumers in the quarter. High gasoline prices likely hurt overall spending in the quarter. The share of gasoline in total retail sales indeed averaged 12.5 per cent in Q1, not far from the peak reached in the third quarter of 2008 when the energy price spike had consumers cutting back on overall spending."
Fiat, Mazda team up Fiat and Mazda are teaming up to build a new roadster.
Fait Group Automobiles SpA and Mazda Motor Corp. said today they've signed a non-binding deal to develop and manufacture a new vehicle - a two-seat convertible - for the Mazda and Alfa Romeo brands.
They're looking at making two "differentiated, distincty styled, iconic and brand-specific lightweight" roadsters, based on Mazda's next-generation rear-wheel-drive system.
The vehicles would be built in Hiroshima, starting in 2013.
|BMO-T Bank of Montreal||70.47||
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|CP-T Canadian Pacific Railway||164.26||
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